Penney, whose sales were down 25 percent last fiscal year as it eliminated most coupons and discounts, is in the midst of transforming 700 of its stores into collections of branded boutiques, including Joe Fresh, a popular Canadian apparel brand and retailer owned by Loblaw.

The company has said that Joe Fresh, along with a new home-furnishings section being launched this spring, are instrumental to returning Penney to growth.

"Customers do seem to be reacting positively to the Joe Fresh launch," Oppenheimer's Brian Nagel wrote in a research note, based on visits to stores over the weekend.

Nagel praised the Joe Fresh merchandise and its pricing, and said the shops are a "bright spot" for Penney.

Separately, International Strategy and Investment Group analyst Omar Saad published a research note on Monday that highlighted the value of Penney's real estate.

If Penney, which owns 426 of its 1,100 stores, separated its 300 best locations into a real-estate investment trust (REIT) and sublet space to higher end brands and retailers, that business could be worth $40 per share, Saad wrote.

By early afternoon, Penney shares were up nearly 10 percent. (Click here for the latest price.)